The joint BBC/ITV/Sky survey released at 10pm after polling stations closed put the Conservatives ahead on 316 seats, with Labour on 239, the Liberal Democrats on 10, the SNP on 58 and Ukip on two.
Douglas Carswell, a former Tory MP who defected to Ukip, won the Clacton by-election in October, followed by Mark Reckless' victory in Rochester and Strood in November. The two are expected to retain their seats which, if the exit poll is correct, means Farage will have lost his contest in South Thanet.
A Labour source at the South Thanet count said: "On the boxes that have been opened, that's how it appears to us. The ward is Cliftonville East, which is a strong Tory ward that we haven't held for 30 years.
"We would expect Ukip to do well. The boxes, from what we have seen, are showing the Tories comfortably in the lead and Ukip behind that and Labour closely behind that.
"We shouldn't be competitive with Ukip in that ward. It's only one ward but we feel that Ukip are not going to win."
But Paul Nuttall, deputy leader of Ukip, was adamant Farage would win a seat.
"We are going to get more than two seats tonight," he said. "We are going to do well in Kent we are going to do well in Essex. I do think [the] exit poll is wrong.
"I think Nigel Farage has won and I think he has won by a bigger margin that what people think."
Ukip's deputy chairman Suzanne Evans was also sceptical of the poll.
At an election night party, Farage said: "We will have to see - the first result we got tonight was from Sunderland. It showed the Ukip vote up by 7,000 and the Tory vote down by 1,000.
"I want to congratulate the editors of The Sun and the Daily Mail - they said the Ukip vote would split the Tory vote. God help us."
Another exit poll conducted by YouGov for The Sun of 6,000 people who had voted painted a much brighter picture for Miliband, putting Labour and Tories tied on 34% each, Ukip on 12%, Lib Dems on 10%, the SNP and Plaid Cymru on 5% and Greens on 4%.
In March, Farage said he would quit as party leader if he failed to win his South Thanet seat. Writing in his book "The Purple Revolution", he said failure in the general election would be "curtains for me," adding that it would be "just not credible" for him to remain as party leader.
Of the three constituencies which have already declared their seats, Ukip came second in both Washington and Sunderland West, and Houghton and Sunderland South, and third in Sunderland Central.
In the days leading up to the election, arguments have been made for bringing in proportional representation to replace the current first past the post system. A recent survey revealed more than three in five people backed electoral reform.
If proportional representation were to be implemented, Ukip would be vying with the Conservatives for Britain's second most popular party.
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